Last week parliament approved the one time disability payment to Canadians with disabilities. It was part of Bill C-20 that also had the changes to the Canada Emergency Wage Subsidy program. The Canadian government says that about 1.7 million with disabilities should benefit from this program. So what are some details of this program? And how do Canadians who have disabilities apply to receive this one time payment?
One Time Disability Payment, How much?
The government of Canada’s website says that about 1.7 million Canadians can receive a one time payment of up to $600.00. Of note, this one time payment is non taxable and does not have to be reported anywhere. In a nutshell it is free money to spend as the recipients see fit. The government will move forward to start paying out on this once the bill receives Royal Assent.
How to Become Eligible to Receive the Payment?
The government of Canada’s website outlines three ways a person with disabilities can become eligible for the payment. Canadians with disabilities will have to fit in one of the three criteria the government has laid out. Here they are below:
They are holders of a valid Disability Tax Credit certificate (eligible persons not yet in possession of such a certificate would be able to apply for one up to 60 days after Royal Assent to be considered for the one-time payment).
Are currently receiving Canada Pension Plan disability benefits or Quebec Pension Plan disability benefits.
Or are in receipt of disability supports provided by Veterans Affairs Canada.
The government is hoping to help one of the most vulnerable groups to cope with the additional stresses due to COVID-19 with a non-taxable one time payment. This can be spent on whatever they need, and does not need to be tracked. During these uncertain financial times, any help that can be rendered is appreciated. Will it be enough to help Canadians during COVID-19? Only time will tell.
The Canada Emergency Wage Subsidy extension was passed through Bill C-20 this week. Along with the extension, there are significant changes to the program. I will try to break down these changes as clearly as possible.
Canada Emergency Wage Subsidy Extension
The Canada Emergency Wage Subsidy has been extended until December 19, 2020. Here’s a quote from an article from CPA Canada below:
allow the extension of the CEWS until December 19, 2020, including redesigned program details until November 21, 2020
What does this mean? It means that the program is extended until December 19, 2020 but the details of the program only go to November 21, 2020. There are no details yet on how the last four weeks of the program will be administered at this time. So what are the newest changes?
Canada Emergency Wage Subsidy Extension Changes, Elimination of 30% Revenue Test
As of July 5, 2020, applicants for the subsidy will no longer have to have at least a 30% revenue drop to apply for the Canada Wage Subsidy. If you have any kind of revenue drop, you can apply. Many felt that the 30% drop requirement was too strict and due to that, many businesses could not apply. The hope now is that more businesses can apply for the subsidy. However, the subsidy has now changed, with the program now having two components, the base subsidy and the top up.
Canada Emergency Wage Subsidy Extension Changes, Base Subsidy
As of July 5, 2020 , there will be a base wage subsidy for employers to claim for wages. For example, if your revenue drop was 50% or more then you will have a base subsidy of 60% of employees’ wage. If your revenue drop was 49% or less, then your base wage subsidy will be your percentage drop x 1.2 x employee’s wage.
However, this rate is only good for the first two 4 week periods as the rates drop off afterwards. For example, if your revenue drop was greater than 50%, your base subsidy rate in the 3rd 4 week period would drop to 50%, the next 4 week period to 40% and the next one to 20%. The same is true if your revenue extension was 49% or less. In the 3rd 4 week period, your base wage subsidy would be your percentage drop x 1.0 x employee’s wage. In the fourth period you have your percentage drop x 0.8 x employee’s wage. The 5th period you would have your percentage drop x 0.4 x employee’s wage.
1.2 x revenue drop (e.g., 1.2 x 20% revenue drop = 24% base CEWS rate)
1.2 x revenue drop (e.g., 1.2 x 20% revenue drop = 24% base CEWS rate)
1.0 x revenue drop (e.g., 1.0 x 20% revenue drop = 20% base CEWS rate)
0.8 x revenue drop (e.g., 0.8 x 20% revenue drop = 16% base CEWS rate)
0.4 x revenue drop (e.g., 0.4 x 20% revenue drop = 8% base CEWS rate)
Canada Emergency Wage Subsidy Extension Changes, Top Up
A second part of the program is a top up available for businesses that have lost 50% or more in revenue. The top-up increases depending upon the revenue to a maximum of an additional 25% subsidy which would be added to the amount of your base subsidy. Here’s another chart from the government of Canada’s website that highlights this below:
3-month average revenue drop
Top-up CEWS rate
Top-up calculation = 1.25 x (3 month revenue drop – 50%)
What is the safe harbour rule? It is when an employer who was on the program prior to July 5, 2020 and was receiving wage subsidy for their employee(s) of 75%. For the next two periods ending August 29, 2020, they will either receive 75% of employee(s) wages or the next base rate plus top up, whichever is greater. However, after August 29th, they would be subject to the new changes fully.
The government’s changes to the Canada Emergency Wage Subsidy does have the potential to help more Canadian businesses. However, it is a short term solution as the program has a “weaning off process” as it pays less and less over time. So there is definitely incentive for businesses to get up and going quickly.
However, there are unknowns based on how quickly certain areas of the economy can recover from the pandemic and if there is another wave or surge. At that point all bets are off and was probably why the government did not provide details for last period going into December. As that is the great unknown. The changes are a bit complicated and will take some time to understand and hopefully more details will be provided in the days ahead.
The Canada Emergency Wage Subsidy Extension was just announced today by the prime minister this morning. The news is definitely a relief for the many businesses struggling to stay afloat during this pandemic. How long is the extension for and when does the program end? See below:
What is the Canada Emergency Wage subsidy? Quick Review
Here’s a quick summary from a CBC article today: “The program covers 75 per cent of wages, up to a weekly maximum of $847, for workers at eligible companies and non-profits affected by the economic slowdown caused by the COVID-19 pandemic.”
Originally the program went from March 15, 2020 to August 29, 2020. This meant that an employer could collect a 75% wage subsidy on an employee’s wages up to 24 weeks as per the government’s website. For more details on the Canada Emergency Wage Subsidy Program, please look at my original article regarding this.
Canada Emergency Wage Subsidy Extension
As mentioned earlier, the prime minister announced that the government will be extending the program until December 2020. The exact weeks extension and when you can apply for the extension was not announced as of yet. Once further details are given, we will update these details.
As mentioned above, many small businesses will welcome the extension of the program as the economy recovery from the pandemic is slow. Also, with uncertainties surrounding covid-19 such as a potential second wave, many businesses are worried about their future. And any help during this unstable time is good help for sure. Stay safe!
You might be wondering what is the Canada Emergency Wage Subsidy Program (CEWS) all about? It is an important question because many business owners are suffering right now due to COVID-19. They want to remain open and keep their staff employed, but many do not understand the specifics of this program that is supposed to help them. Let’s provide some clarity to this program.
What is the Canada Emergency Wage Subsidy Program (CEWS)?
It is a wage subsidy program for businesses whose revenues have been negatively affected by the coronavirus outbreak. The amount of the wage subsidy is 75% of employees wages for a 12 week period from March 15, 2020 to June 6, 2020. The purpose of the subsidy is to rehire previously laid off workers as a result of Covid-19 to prevent further job losses and put businesses in a better position to recover after the crisis passes. For more information, go to the Government of Canada’s website.
Canada Wage Emergency Subsidy Program (CEWS): Who is Eligible?
In a nutshell you eligible for this Government of Canada program if you are an employer who has experienced a reduction in revenue and had a CRA payroll account on March 15, 2020. The Government of Canada’s website has a list of eligible employers but the only ineligible employers appear to be public institutions such as municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals.
You Must Also Have an Eligible Reduction
Besides being an eligible employer, you must also have an eligible wage reduction. What is that? You are basically comparing your normal monthly revenue with the the 3 months affected by Covid-19 (March 2020, April 2020, May 2020). However, there are 2 choices to choose from to use as your normal monthly revenue. (This refers to pre-coronavirus revenue.)
Option 1 is to use your revenue from the corresponding month of the previous year. This means you would use March 2019 as your normal revenue period and compare it with March 2020 and there should be a revenue drop of at least 15% to be eligible for that period. You would then use April 2019 and compare with April 2020 and there should be a revenue drop of 30% to be eligible for that period. Finally, you would use May 2019 and compare with May 2020 and there should be a revenue drop of 30% to be eligible for that period.
Option 2 is that you take the average monthly revenue for January and February 2020 and compare this with March 2020, April 2020, and May 2020. You would be eligible for subsidy for a particular month if there is a reduction in revenue of at least 15% in March, 30% in April, and 30% in May.
Here’s is a warning, however. Whatever option of comparing revenue you choose, you have to stick to using that option when calculating the revenue reduction of each month. You cannot switch between options.
Who are Eligible Employees for the Canada Emergency Wage Subsidy Program ?
They are employees hired by you and who have not been paid by you for less than 14 consecutive days. Employees whom you have laid off can become eligible if you rehire and retroactively pay them. You must do this before you can include them in your calculation of the wage subsidy.
How to Calculate the Wage Subsidy?
At the Government of Canada’s website, there is an Excel spreadsheet and a calculator to help you calculate this amount. It is based on the following information below:
If neither are an option for you, use the Web Forms application with your web access code. If you do not have a web access code, you will need to provide the date of registration or the total income tax reported in box 22 of the most recent original 2018 tax year submitted T4 summary.
The government’s website says that you can get paid within 10 days of applying if you have direct deposit. If you are getting paid by cheque, this will take a bit longer.
Also of note, the Canada Wage Subsidy is taxable and therefore you will have include it on your tax return as taxable income.
The Canada Emergency Wage Subsidy Program may appear to be a complicated and detailed program to apply for. However, it could be very beneficial as it helps you cover most of your employees’ wages for a 3 month period. One benefit is that you can get money fairly quickly once you apply. It is something that businesses in Canada should seriously look into. Because it could make the difference between staying open and closing for good.